Giving it away

At Slate, Matt Yglesias reports on attendance at a WNBA game in DC, wondering why the stands are not full:

Now it’s easy to tell a story where the demand just isn’t that price-responsive and so the revenue-maximizing price doesn’t generate sellouts. But this is what price discrimination is for? Where’s the senior discount? Where’s the kids discount? And heck, just give tickets away for free. I’d be trying to find every girls sports organization in town and give them blocks of free tickets. You’d make some money at the concession stand, you’d make the game experience more enjoyable for the other paying customers since there’d be more people cheering, and it’d be an investment in building a future fanbase by getting kids into the arena when they’re young. The closest they seem to have to a price discrimination strategy ismoderate discounting of large groups buying over 15 tickets.

I’ve often wondered more or less the same thing about Wizards games where they routinely don’t come close to selling out in recent years and thought proprietors of low-quality NBA pricing could learn a lot from airlines who try very hard to avoid flying half-empty airplanes. But the men’s team always comes close enough that it doesn’t actively detract from the fan experience, so I figured maybe they know what they’re doing. With the Mystics, though, even though they’re clearly aware of the basic concept that you charge less money for a less-popular product they really don’t seem to have grasped the idea that the marginal cost of filling a seat is about $0. You’ve gotta do something to get people in there, cheering and buying chicken fingers.

He’s right on the marginal cost of filling a seat being next to nothing, and that’s going to be the case for the majority of arts organizations as well, save for very crowded museums and festivals. And he’s right that the point of price discrimination is to try to fill those empty spaces while not giving all the seats away for free, but charging a price to those who are in fact willing to pay.

But the fact is that arts (and sports) organizations can’t always fill the house even by giving away tickets. Attendance at a concert or museum is costly to the customer even with free admission, because there are costs of time and travel to consider. If someone gives me a ticket to a play, I still have to consider the cost to me of using my evening at the theatre rather than elsewhere, and the time of getting to the theatre and back. And sometimes it just isn’t worth it. Ask yourself: how many cultural and recreation activities are available in your town, with no admission fee, that you simply do not attend? If, like me, you are only allotted 24 hours in a day, there will be many. Even physical goods come with a storage cost, such that when offered “free” goods we often turn them down – they are not worth the space they would occupy.

Okay, none of the above counts as a brilliant new insight. But there is a lesson in there. The point of strategic pricing is gain what revenue you can from those who value what you present highly enough to be willing to spend their time with you. Lowering prices across the board, or use of price discrimination strategies, can increase your audience, and perhaps your revenues, up to a point. But strategic pricing cannot solve all revenue problems. Because it remains that the majority of the local population will not attend your exhibitions, even if the admission price is zero.

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Comments

In the arts, the issue of demand is far more complex than simply making tickets free or affordable. The principle factor is education that creates cultivated individuals willing to experience art. Another important factor is creating a sense of communal identity around arts institutions (sort of like the way communities identify themselves with their sports teams, especially when they are winning.) I think it is also important that the arts be relevant. What sort of meaningful, intelligent contemporary art engages people? What sort of art makes people want to come together to experience it rather than just watch it alone on a video screen? What are some of the other factors that create demand? How can funders, educators, and artists better work together to solve these problems? How often do they form a team and work together?

As a composer, these are problems I have tried to solve, though often with little success. I have tried to create a form of chamber music theater that costs very little to produce. I have tried to address themes relevant to the modern world. I have tried to write in a communicable language that does not require specialized tastes.

Still, like most composers, it is still difficult to even give away what I do. And oddly, some of the social themes I have addressed have even created severe resistance in the musical establishment in Germany where I live. I think most art is something you do alone for a small group of people who care. I wonder if the idea of art as some sort of big communal event is a dying 19th century ideal. Perhaps house concerts, salons, and soirees are the formats of the future.

It occurs to me that my comment (I’m here form Jon Silpayamanant’s blog, BTW) was a bit glib, and that I should expand on it, mostly because I want to make absolutely sure that this is understood. I feel this passionately, and I want to make sure that this comes across. That tendency to say “experience” when we should be saying “create” is the problem. That’s it. Seriously. That’s the mutation that caused the cancer. Right there.

We live in a fanfiction culture. We live in a world where people, when they experience art, react by assuming that they can, should, and even must create some themselves. Where being a “real fan” of something — a movie, a TV or book series — almost requires that one respond with one’s own creativity. You either find a way to get your audience to go home and make some kind of art themselves, or your audience will dwindle. Several thousand pages of Harry Potter novels spurred the creation of several million pages of fan response. Some of it stinks, but who cares? Some of it is very good, and all of it created joy and a sense of deep love for the art that will last those people for the rest of their lives.

If you don’t get your audience in touch with their own creative juices and instead only spray your own all over them, that’s just not going to do it. How? Well, it’s the artist’s job to figure that out. JK Rowling and Gene Roddenberry did. So did Haendel and Rossini.

Classical music has built its entire castle on the foundation that no one could ever, ever, ever do what they do, that if you love that music, the best you can do is to just passively sit there and consume it unless you began in the womb and own an instrument worth more money than you’ll ever see in your lifetime. And you know something? Not all that music is that damned hard. Why is it that the only stuff that’s played is the musical equivalent of Evel Knievel jumping over buses? Why the hell don’t any of the big names play Grieg anymore? Bluntly, it’s because that culture has determined that the only message worth sending on stage is, “This will never be you.”

That’s got to give way, and it’s got to do so now. The classical music industry either learns how to monetize that sentence with the word “create” instead of the word “experience,” or it will continue to struggle. We live in a participatory culture. Adjust, or die.

Michael Rushton

Michael Rushton teaches in the Arts Administration programs at Indiana University in Bloomington. An economist by training, he has published widely on such topics as public funding of the arts, copyright, nonprofit organizations and tax policy, and served as Co-Editor of the Journal of Cultural Economics. At IU he teaches Read More…

About For What It’s Worth

What’s the price? Everything has one; admission, subscriptions, memberships, special exhibitions, box seats, refreshments, souvenirs, and on and on – a full menu. What the price is matters. Generally, nonprofit arts organizations in the US receive about half of their revenue as “earned income,” and … [Read More...]